Kenya’s coffee export projected to rise by 3% on back of increased production, favorable prices

KENYA – Kenya’s most valuable cash crop, coffee, is projected to register a 7% rise in production in Marketing Year (MY) 2021/22 from 700 to 750 thousand bags.

The rise, according to a report by USDA, will be realised on the back of good weather, better crop husbandry practices, and an anticipated high-producing period in Kenya’s coffee production cycle.

Additionally, yields are projected to increase due to improved crop husbandry practices by farmers as growers rehabilitate their farms and increase inputs in response to improved prices.

MY 2021/22 is also expected to be a cyclical peak production year for most trees in Kenya. Coffee trees undergo annual variations in their yield, usually increasing two consecutive years and falling the third.

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Despite the increase in production, area planted is revised down from 112 to 105 thousand hectares in MY 2020/21 as many large farms have been converted into real estate development, particularly in peri-urban areas such as Kiambu and Nyeri.

This trend will continue in MY 2021/22 but will be offset as some growers plant new trees outside of peri-urban areas in response to high prices this year.

Coffee exports projected to rise by 3%

The report has highlighted that price of coffee presented at the Nairobi Coffee Exchange, have recently surged due to increase purchases by traders and roasters and concerns over shortages of top-quality coffees.

Industry sources indicate the quality of coffee presented at NCE has improved lately which will help sustain higher prices.

The favorable price trend is expected to encourage farmers to intensify production going into MY 2021/22.

Over 90 percent of Kenyan coffee is sold through the NCE while the rest is done via negotiated contracts between private parties.

Kenya’s coffee is one of the sought after in the world with MY 2021/21 exports forecasted to increase by 3 percent from 700 to 720 thousand bags due to higher production yields.

Kenya’s mild arabica coffee accounts for less than one percent of the world’s coffee exports of the variety.

As a result, most coffee from Kenya is consumed as specialty coffee and used to enhance coffee blends.

In MY 2019/20, the United States regained its position as the leading export destination for Kenyan coffee. Other key destinations include Germany, Belgium, and South Korea.

Local coffee consumption to marginally rise

Domestic coffee consumption is expected to increase from 36 to 43 thousand bags in MY 2021/22 as the tourism and hospitality sectors recover from COVID-19 disruptions.

In MY 2019/20 and 2020/21 consumption was depressed due to low tourism and the closure of hotels, restaurants, coffee houses, and other eateries.

As most consumers in Kenya continue to prefer tea over coffee, Kenyan consumption is driven by tourism, immigration, and rising domestic consumption in urban areas where coffee culture is taking root.

While MY 2021/22 consumption is expected to increase, it is not forecast to recover to pre-pandemic levels.

Prior to the pandemic, coffee consumption in Kenya was growing, particularly through increased investment in coffee houses.

Additionally, several businesses set up training facilities to promote coffee preparation and consumption.

In April 2020, the Government of Kenya (GOK) announced a US$14 million coffee revitalization program, with the majority of these funds allocated to improving coffee processing and the rest dedicated to input use and support for cooperatives. The impact of this program will likely not be observed until after 2022.

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